Customs, Excise and Gold Tribunal - Tamil Nadu
Collector Of Central Excise vs Metal Closures (P) Ltd. on 21 July, 1992
Equivalent citations: 1993(65)ELT579(TRI-CHENNAI)
ORDER S. Kalyanam, Member (J)
1. This appeal is filed by the Department against the order of the Collector of Central Excise (Appeals), Madras dated 2-8-1989 allowing MODVAT Credit availed by the Respondent on Aluminium sheets for a sum of Rs. 30,444.63.
2. Shri J.M. Jeyaseelan, the learned D.R. contended that the goods were not meant for the Respondents but were re-directed partly to the Respondents by Indian Aluminium Company and therefore, as per the Departmental instructions the Respondents were required to obtain a subsidiary gate pass to cover the goods in question as otherwise it will not be possible for the Department to make verification.
3. The respondent is absent though fresh notices were ordered and served. Since the Respondents did not turn up, the matter is decided with reference to records.
4. We have considered the submissions made before us. No doubt evidence shows that the goods in question have been covered by gate pass though the goods were originally meant for two other consignees and were partly diverted to the Respondents by the original consignee. There is no evidence on record to indicate as to whether any verification was made by the authorities to find out as to whether the gate passes in question were referable to the inputs in question and in the impugned order the gate passes in question have been accepted by the lower appellate authority without any verification. Since verification of the gate passes vis-a-vis inputs in question would appear to be necessary in the context of the Modvat Scheme, we set aside the impugned order and remand the matter to the original authority for such verification and decide the matter in accordance with law. Remanded accordingly.
V.P. Gulati, Member (T)
5. I agree. However, I observe that Rule 57A envisages evidence of payment of duty in respect of the inputs for which credit is sought to be taken by way of production of gate pass etc. In case where the gate passes are in the name of the assessee and the goods are received directly from the manufacturer, there would not be any difficulty in accepting the same as evidence of payment of duty. However, in the present case the goods were originally consigned to another party and were diverted partly to the Respondents and gate passes which have been issued in the name of the original consignee cannot be straightaway accepted since this can lead to misuse. It is possible that another set of goods which have not suffered duty and which may have emanated from the same manufacturer or a different manufacturer may be sent under the original consignee's gate pass or in other words a duplicate transport may be made against the gate pass in question. In a situation as in the present case the gate passes as evidence of payment of duty in the name of the original consignee cannot be accepted without necessary check & verification. The lower authority by doing that without any verification has fallen in error. While MODVAT facility has been given to reduce the cascading effect of the duty paid on the inputs, necessary safeguards in this regard have also to be observed. The basic safeguard is that there should be proper acceptable evidence that the goods have suffered duty. Just because gate passes have been issued in the name of another consignee that by itself cannot also be a reason to deny the credit. It has to be shown that there is enough evidence on record that the goods which were sent against the gate passes are the same as have been received by the assessees. As it is, the position regarding diversion of goods from one consignee has been accepted by the authorities by prescribing issue of subsidiary gate pass procedure when the original gate pass is in the name of another consignee. This would show that production of original gate pass is not the sine qua non for taking MODVAT Credit and there can be a situation where evidence other than this can also be accepted. In the present case there is no evidence of issue of any subsidiary gate pass. The evidence shows that the goods were consigned to another consignee and were partly diverted to the Respondents and the original consignment was covered by a gate pass. The learned lower authority has accepted the original gate pass as evidence of payment of duty without any other supporting evidence without putting the Department on notice and without any verification. This in view of what we have stated above was not a proper thing to do. We, therefore, set aside the order of the lower appellate authority and remand the matter to the original authority for de novo consideration of the issue in the light of our above observations.